Bill to allow U.S. Crude Oil Exports

[dan_s]

Refining & Marketing: Crude Exports, ALJ meetings and Bearish DOE
Evan Calio – Morgan Stanley
September 21, 2015 7:00 AM GMT

Crude exports one step closer, but still miles to go. On Thursday the US House Energy and Commerce Committee approved a bill to lift all restrictions on US crude exports by a 31-19 vote. While it could be voted on by the full House later this month, the bill’s path in the Senate remains unclear and it faces opposition from the White House, limiting the likelihood that an export policy change could become law before President Barack Obama leaves office in 2017.On Tuesday, White House spokesman Josh Earnest said the administration “wouldn’t support” the crude export bill because such a policy change should be made by the Department of Commerce. A Commerce spokesman said Wednesday that the agency was not working to change current export policy, which restricts US crude exports with some exceptions. Democrats raised a variety of concerns with the bill, including possible complications with the Jones Act, an unknown effect on gasoline prices, harm to domestic refiners and an increase in climate emissions from the expected boost in production following a policy change. In addition, some Democrats portrayed the bill as a giveaway to major US oil companies. While we believe the news of lifting the crude export ban would likely result in a broad based sell-off in refining sector, this would be primarily driven by sentiment vs. negative earnings revisions. Since crude diffs are already at or below transportation economics, we do not see major earnings revisions even if the ban were lifted late 2016 or early 2016.

MY TAKE: Obama will never approve a bill that will be seen as helpful to U.S. oil producers. A Republican president will be needed.